SCALING THE GREAT WALL OF CHINA 16 Y E A R S IN CHINA
"To the contractor, it's a case of giving one, w i n n i n g fifty. But to us, even a single dollar of bribe is not a c c e p t a b l e . " - M r Jason Leow, CEO of CapitaLand China Holdings Pte Ltd
0
nee upon a time, a Singapore company tried to make its fortunes in China.
For a few years, it lost money. Few in China knew the company existed. Yet, it persevered and laboured against the sceptics. Sixteen years on, the CapitaLand name is proudly brandished on more than 100 projects in 40 cities across China. It is feted with local awards for outstanding development and management. Its local portfolio, once in the red, is now worth over S$20 billion, and accounts for 3 6 % of the Group's total assets as at June 2010. China has become, in the words of Mr Liew Mun Leong, President & CEO of CapitaLand Group, "our most successful overseas market".
BEGINNINGS In the past, DBS Land and Pidemco Land had seeded projects in China. However, the projects were sporadic and there were even some project teams where the team members did not know one another.
Coincidentally, Mr Lim Ming Yan was in Shanghai at the time as well. After serving as Chief Corporate and Investment Officer for Somerset Holdings (now part of The Ascott Limited (Ascott)), he had just been transferred to DBS Land to help with the merger of DBS Land and Pidemco Land. Recalled Ming Yan: "They couldn't find the right person. Since I went along to check out DBS Land's China businesses, I was within sight. Mr Liew Mun Leong saw me and said maybe I should do the job since I am bilingual." M i n g Yan, currently the CEO of Ascott, went on to spend close to 10 years in China after that fortuitous appointment. Now widely credited for CapitaLand's success in China, Ming Yan - who was lauded as Outstanding Chief Executive (Overseas) at the Singapore Business Awards in 2006 - recalled how he set about forming a China team: "First, we had to build the best team. Once you have that, you will start to do w e l l . "
BUILDING THE DREAM TEAM I POSITE: zhimen Mall, Beijing, na - one of CapitaMalls ia's 52 retail properties the country
In 2000, CapitaLand, newly formed after the merger of DBS Land and Pidemco Land, was looking for a country leader in China to pull together these disparate projects and forge a common identity. Mun Leong, eager to recruit the appropriate talent, flew to Shanghai to interview potential candidates.
PIONEERING SHOPPING MALLS IN CHINA CapitaLand's impact on Chinese lifestyles has been significant s it introduced the concept of a shopping mall - a one-stop destination with various tenants and shopper activities. This is n stark contrast to the traditional departmental store where all merchandise are placed on shelves with little thought. conic first was when CapitaLand launched its highly jeeessful Raffles City concept in China in 2003, with the opening f Raffles City Shanghai that year. The shopping mall component
Ming Yan took one year to assemble his dream team. He searched for the best candidates, and bided his time until they were ready to join him in China.
of the integrated development soon became, for the youth of Shanghai, the place to go, be seen, and buy branded items from international brands. Other malls were opened in quick succession in the smaller, suburban second- and third-tier Chinese cities, which cater to the day-to-day shopping and dining needs of the locals. CapitaMalls Asia has now 52 malls in operation or under development across 34 Chinese cities, with a gross floor area of approximately 46.5 million square feet.
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- Mr V V i i P o S u m , C h a i r m a n o f t h e B o a r d o f C e n t r a l C h i n a R e a l E s t a t e L i m i t e d
M r Jason Leow, w h o n o w heads C a p i t a L a n d C h i n a
be it t h e d e t e r m i n a t i o n o f p l o t r a t i o s f o r r e s i d e n t i a l
H o l d i n g s Pte Ltd ( C C H ) as its C E O , w a s r e c r u i t e d f r o m
developments or the relocation process of residents
A s c o t t then t o join this p i o n e e r core team.
f r o m p r o j e c t sites.
M i n g Y a n e v e n a s k e d his f o r m e r b o s s f r o m t h e
" T h e m a r k e t w a s n o t very r e g u l a t e d . A l o t o f t h i n g s
m i l i t a r y t o j o i n t h e t e a m . S e r v i n g as a l i e u t e n a n t -
d e p e n d e d o n guanxi
c o l o n e l in t h e S i n g a p o r e A r m e d F o r c e s (SAF)
r e c a l l e d a c a s e in w h i c h C a p i t a L a n d h a d l e a s e d o u t
p r e v i o u s l y , M i n g Y a n u s e d t o r e p o r t t o M r Lien B e n g
a parcel o f land originally i n t e n d e d f o r a later phase
T h o n g , a f o r m e r c o l o n e l in t h e SAF.
o f a l a r g e r c o n d o m i n i u m p r o j e c t . T h e l e s s e e , in t u r n ,
(relationship),"
s a i d J a s o n . He
d e c i d e d to set up a t e m p o r a r y m a r k e t p l a c e o n t h e "I t o l d h i m I w o u l d v e r y m u c h like h i m t o j o i n m e ,
leased land.
p r o v i d e d he w a s c o m f o r t a b l e . He s a i d he w o u l d g i v e me his f u l l s u p p o r t , p r o v i d e d I w a s c o m f o r t a b l e ! "
" W h e n w e d e c i d e d to take back the piece o f land f o r
r e c a l l e d M i n g Y a n f o n d l y o f t h e o c c a s i o n w h e n he
redevelopment, w e could not remove him because
m a n a g e d t o s q u e e z e in his r e c r u i t m e n t p i t c h t o M r
his s h o p s w e r e all d o i n g so w e l l . In t h e e n d w e h a d t o
Lien at t h e a i r p o r t b e f o r e f l y i n g off.
c o m p e n s a t e h i m . " He a c k n o w l e d g e d : " W e lost m o n e y in t h e i n i t i a l f e w y e a r s , s u f f e r e d a little bit. T h a t c a n
T h e t e a m c o m p l e t e , M i n g Y a n w a s all r e a d y t o t a k e
be s a i d t o b e o u r t u i t i o n f e e s . "
OPPOSITE: Orchid Garden, Beijing, China
o n t h e a r d u o u s t a s k s f a c i n g h i m in C h i n a . Then d e a t h struck. M r L i e n p a s s e d a w a y in 2 0 0 2 . T h e G e n e r a l
QUALITY HOMES IN CHINA Manager
( G M ) o f C C H h a d b e e n j o g g i n g in a p a r k in S i n g a p o r e w h i l e o n h o m e l e a v e , w h e n he w a s f e l l e d by a s u s p e c t e d h e a r t a t t a c k . "I w a s v e r y s a d ; it w a s a personal b l o w t o m e , " said M i n g Y a n , visibly affected. But t h e t e a m f o r g e d o n .
SCALING THE CHINA WALL S c a l i n g t h e C h i n a w a l l w a s n o easy task. -aced w i t h t h e sheer scale of a difficult market ÂŁ"d c u l t u r a l h u r d l e s , m a n y f o r e i g n d e v e l o p e r s h a d * : j n d e s t a b l i s h i n g a f i r m f o o t i n g in t h e c o u n t r y a ~ ; - u m e n t a l challenge. There w e r e m a n y grey areas,
O v e r t h e p a s t 16 y e a r s , C a p i t a L a n d h a s d e v e l o p e d , o r u n d e r t a k e n t o d e v e l o p , a t o t a l o f 2 8 , 0 0 0 h o m e s w i t h a g r o s s f l o o r a r e a of 4 . 8 s q u a r e m e t r e s in C h i n a . M r C h a n B o o n S e n g , R e g i o n a l G e n e r a l M a n a g e r , East C h i n a o f C a p i t a L a n d C h i n a H o l d i n g s P t e Ltd, s u m m a r i s e s r e s i d e n t i a l d e s i g n p r e f e r e n c e s a c r o s s v a r i o u s c i t i e s in C h i n a . " A t t h e m o m e n t , S h a n g h a i is into m o d e r n c l e a n m i n i m a l i s t d e s i g n . Beijing is e v e n m o r e m o d e r n , " s a i d B o o n S e n g , w h o h a s b e e n overseeing the project m a n a g e m e n t of CapitaLand residential and c o m m e r c i a l p r o j e c t s in C h i n a s i n c e 1994. " B u y e r s in H a n g z h o u a n d N i n g b o , h o w e v e r , p r e f e r c l a s s i c a l d e s i g n s w i t h heavy stone, strong colours, and Roman columns."
G i v e n t h e w e l l - k n o w n d i f f i c u l t i e s in c o n d u c t i n g
M u n L e o n g o n c e c o m m e n t e d : " T h e r e is n o t h i n g t h a t
b u s i n e s s in C h i n a , it is l i t t l e w o n d e r t h a t m o s t
w e c a n d o t h a t t h e y (the C h i n e s e ) c a n ' t . W e j u s t h a v e
i n v e s t o r s w e r e h e s i t a n t t o p l a c e s i g n i f i c a n t b e t s in
to m a t c h t h e m strength f o r s t r e n g t h . "
t h e c o u n t r y in t h e early years. O n e e x a m p l e w a s the Raffles City Shanghai project, w h i c h w a s nearly
H o w e v e r , C a p i t a L a n d has built up s o m e u n i q u e
s c r a p p e d as a r e s u l t o f t h e A s i a n f i n a n c i a l crisis.
c a p a b i l i t i e s o v e r t h e y e a r s t o o . " C a p i t a L a n d is a
"The investors were wary of putting more money
m u l t i - s e c t o r c o m p a n y , u n l i k e m a n y real e s t a t e
into C h i n a , a n d into t h e project. W h e n w e put
c o m p a n i e s in C h i n a . In r e t a i l , f o r i n s t a n c e , w e d o
up t h e r e c o m m e n d a t i o n t o r e s t a r t t h e p r o j e c t in
not just build but w e also d o leasing a n d property
2 0 0 0 , it t o o k us o n e y e a r t o g e t all t h e s h a r e h o l d e r s
m a n a g e m e n t , " n o t e d Jason.
o n b o a r d , " M i n g Y a n shared. He c i t e d t h e i c o n i c R a f f l e s C i t y d e v e l o p m e n t s But in t h e e n d , t h e h a r d w o r k p u t in by C a p i t a L a n d ' s
all c o m b i n a t i o n s o f r e s i d e n t i a l , r e t a i l , s e r v i c e d
C h i n a t e a m a n d their increasing w e a l t h of on-the-
a p a r t m e n t s a n d o f f i c e s p a c e . " T o d a y , C a p i t a L a n d is
g r o u n d e x p e r i e n c e , p a i d off.
k n o w n f o r all t h e R a f f l e s C i t y p r o j e c t s t h a t h a v e b e e n b u i l t . A n i n t e g r a t e d d e v e l o p m e n t is v e r y d i f f i c u l t t o
F r o m r u n n i n g m a i n l y r e s i d e n t i a l p r o j e c t s in S h a n g h a i
d o b e c a u s e it p u t s all t h e s e d i f f e r e n t b u s i n e s s u n i t s
in 2 0 0 0 , C a p i t a L a n d is n o w r e c o g n i s e d as a l e a d e r
t o g e t h e r i n t o o n e i n t e g r a t e d d e v e l o p m e n t . This is
n o t o n l y in b u i l d i n g h o m e s , b u t a l s o in r u n n i n g
difficult f o r most local d e v e l o p e r s . "
successful malls, d e v e l o p i n g mega-integrated Raffles City d e v e l o p m e n t s a n d o p e r a t i n g serviced apartments across the w h o l e of C h i n a .
In 2 0 1 0 , a g o l d e n o p p o r t u n i t y f o r C a p i t a L a n d t o d o u b l e its p r o p e r t y p o r t f o l i o in C h i n a c a m e a l o n g , a n d t h e c o m p a n y s n a t c h e d it. C a p i t a L a n d a c q u i r e d
STAYING AHEAD
O r i e n t O v e r s e a s D e v e l o p m e n t s L t d ( O O D L ) in a
The c h a l l e n g e n o w is t o stay a h e a d o f t h e g a m e .
d e a l t h a t b o o s t e d C a p i t a L a n d ' s p r o p e r t y p o r t f o l i o in
landmark US$2.2 billion (approximately S$3.1 billion) C h i n a to 2.8 million square metres immediately. A s w i t h its O l y m p i c s s p o r t i n g s u c c e s s e s , C h i n a is a l s o f a m o u s l y c o m p e t i t i v e in t h e b u s i n e s s w o r l d .
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THIS PAGE: Representatives of CapitaLan Muchuan Green Hope School Sichuan, presenting a gift to Ms Ho Ching, Executive Director & CEO of Temasek Holdings, during CapitaLand'; "15 Years in China" Celebrations in Shanghai OPPOSITE: Ascott Huai Hai Road Shanghai, China
Land is the largest international serviced residence owneror in China. Its serviced residence business unit, The Ascott :ott), first entered the China market more than 10 years ago. now has over 6,000 apartment units in 33 properties across 15 ncluding Beijing, Shanghai, Guangzhou, Shenzhen and Chengdu.
" M i n g Yan and I have walked out on many deals because we are not prepared to accept bribes," said Jason. "The message we send out is, we will strike you off our list of qualified suppliers if you offer money to our staff. And if our staff ask you for a favour, you tell us and we will get rid of the staff." He cited a recent case in C h e n g d u , when a
"The Shanghai government was very happy when we took over OODL because they saw what we did before, with Raffles City and other residential projects. We don't hoard land. We buy the land, develop and add value to it," said Jason.
UPHOLDING INTEGRITY CapitaLand has also built up its China reputation on unswerving integrity.
contractor offered a G M US$1 million to award a US$50 million CapitaLand contract to his company. "To the contractor, it's a case of giving one, w i n n i n g fifty. But to us, even a single dollar of bribe is not acceptable. We barred this contractor from all our jobs." The message is drilled down to more than 5,000 staff in China, who form the backbone of CapitaLand's operations there. About 9 5 % of the employees are local Chinese. When they first joined CapitaLand,
stepped off the mini-bus, he was taken aback - not because of the land or the buildings, but because of the people who were put in charge of the sites. "The G M s of the projects were all very young locals, in their late 2 0 s , " explained Ming Yan. On the contrary, most of CapitaLand's G M s at the time were expatriates from Singapore, while locals in their 20s only played supporting roles. ^ ^ ^
they were " a m a z e d " by the rigorous systems in place, Jason said. "It is a surprise to them because generally, real estate companies in China are very dependent on bosses and individuals, and not systems. We are different from the locals because while we are very close as individuals, we behave like an institution. We do not want to depend on individuals." Jason added: "The CapitaLand culture is very strong in China and that is a key reason for our success. We co more than we talk. We fly the CapitaLand flag before u s . "
"The whole trip, instead of looking at the buildings, I was more interested in the people! I asked the young G M s questions and I realised that while they were not very experienced, they were committed. A n d they had the technical k n o w l e d g e . " m
"It was a mental breakthrough." Ming Yan decided to put aside his fear that the inexperienced might make mistakes, and set about promoting younger competent staff, w h o up till then were deputies, to decision-making posts. "They rose to the occasion. In fact, they have done well and I'm very happy," he said.
BREAKING PEOPLE BARRIERS At the heart of rules and systems, however, are the collective efforts of the people in the organisation. And CapitaLand prides itself on how its people are spotted, nurtured, and challenged. Ming Yan pinpointed, with startling clarity, two breakthrough moments which fundamentally changed the way CapitaLand manages its staff in China. In 2005, he was in Henan province to visit the project sites of a potential joint venture partner. When he
50
The second breakthrough came also in 2005. Ming Yan noticed that one of CapitaLand's partners in China was hiring more than 50 fresh university graduates a year from Chinese universities. Curious, he asked the partner if he had positions for all of them and the reply was: "It does not matter if there are positions. We reel in the talent and then find places for t h e m . " Ming Yan agreed: "It struck me that we had not been progressive enough in our human resource (HR) practices. We should take in as many as we can train,
THIS PAGE: CapitaLand staff in China having a brainstorming sessk
OPPOSITE: A CapitaLand staff participating in a team building exercise
n o t d e p e n d i n g o n h o w m a n y p o s i t i o n s w e have. If
Said M i n g Y a n : " O n e of t h e s t u d e n t s s a i d t h e
t h e y are g o o d , t h e y w i l l be a b l e t o d e f i n e t h e j o b . "
t h e C E O p e r s o n a l l y c a m e d o w n t o t h e c a m p u s to & ÂŤ
He s u b s e q u e n t l y f o u n d o u t t h a t in t h a t s a m e y e a r ,
students s h o w e d the company's emphasis on p e : : =
" :-
C a p i t a L a n d did not hire a single university g r a d u a t e in C h i n a as t h e d e p a r t m e n t s w e r e n o t s u r e t h e y h a d p o s i t i o n s t o fill.
W h a t also got the students excited w as M i n g Y a n ' s e x p l a n a t i o n t h a t C a p i t a L a n d w a s an i n t e r n a t i o n a l c o m p a n y w i t h a g l o b a l p r e s e n c e , w i t h p l e n t y of
S t r a i g h t a w a y , he s q u a r e d his s h o u l d e r s a n d h e a d e d t o
r o o m t o g r o w . S o m e of t h e s e b r i g h t y o u n g s t u d e n t s
t o p C h i n e s e u n i v e r s i t i e s , s u c h as F u d a n U n i v e r s i t y a n d
became management associates, were assigned
S h a n g h a i Jiao Tong University, and made a personal
mentors and rotated through different departments
pitch to the students to join C a p i t a L a n d .
f o r up t o six m o n t h s at a t i m e .
F r o m z e r o a p p l i c a t i o n s in 2 0 0 5 , t h e c o m p a n y r e c e i v e d
The s c h e m e w o r k e d m a r v e l l o u s l y . " A f t e r six m o n t h s ,
a stunning 4 , 1 9 9 applications f r o m university
the d e p a r t m e n t s w e r e not w i l l i n g to release the
g r a d u a t e s in 2 0 0 6 . O u t o f t h e s e , C a p i t a L a n d h i r e d 11.
p e o p l e ! " e x c l a i m e d M i n g Y a n . " T h e y w e r e so smart and d o i n g such a g o o d job they have b e c o m e
The f o l l o w i n g year, the n u m b e r of a p p l i c a t i o n s
i n d i s p e n s a b l e . It s h o w s t h a t t h e s e p e o p l e c a n p i c k
s w e l l e d f u r t h e r to 1 6 , 9 3 5 . C a p i t a L a n d hired 30.
t h i n g s up very f a s t . "
BUILDING PEOPLE M r Q i a n Y i q i is a s t a f f m e m b e r w h o has l e a r n t a lot in his s e v e n y e a r s o f w o r k i n g in C a p i t a L a n d . The C h i n e s e n a t i o n a l , w h o h a d worked for two Singapore companies previously, decided to join CapitaLand in 2 0 0 3 b e c a u s e o f its c r e d o . "I w a s d r a w n by t h e c r e d o o f ' B u i l d i n g P e o p l e ' , " said Yiqi.
"The
emphasis on meritocracy was something I was attracted to, and I t h o u g h t I w o u l d be able to fit into this sort of c o r p o r a t e c u l t u r e . " In his s e v e n y e a r s w i t h t h e c o m p a n y , t h e s p e c i a l i s t in e c o n o m i c g e o g r a p h y has g o n e f r o m a j u n i o r s t a f f d o i n g l a n d a c q u i s i t i o n in t h e eastern part of C h i n a , to b e c o m e D e p u t y R e g i o n a l G M o f East C h i n a . T o d a y , he o v e r s e e s h u n d r e d s o f
staff and major projects - including the construction of Raffles City Hangzhou and Raffles City Ningbo. He counts his Ningbo experience as one that sharpened his leadership edge. In 2005, he was sent to the city with three other staff to get things going. It was the first time CapitaLand had ventured into a second-tier city. "It was very challenging because we had to start everything from scratch," said Yiqi. "Local policies were different; we did not know any of the officials." But as he put it, "I did it with pain, but there was also gain." By the time he was transferred to another regional office, a CapitaLand office of over 70 staff had been established in the city and several major projects were underway. Said Yiqi: "I have been growing with the company over the years. The 'Building People' credo, which was why I first joined the company, was something which really happened to me. I was challenged and nurtured, and I am thankful for that."
THIS PAGE: Summit Residences, Ningbo, China OPPOSITE: Westwood Green, Shanghai, China
ROBUST FINANCIAL SERVICES Financial services are an integral part of the Group's drive to expand its business and grow its franchise value. CapitaLand originated and manages a portfolio of China-focused funds covering the mixed-use development, residential, retail, business park, and serviced residence sectors. The first Chinafocused fund, CapitaLand China Residential Fund, was ciosed in 2004. This fund successfully exited in September 2009 and
outperformed target returns. Thus far, the company has originated nine China-focused private equity funds. CapitaLand also launched and managed CapitaRetail China Trust, the first China shopping mall real estate investment trust listed in Singapore. Said Mr Jason Leow, CEO of CapitaLand China Holdings Pte Ltd: "We are very strong in fund and capital management. In China, a lot of people are still relying on banking facilities but we started real estate funds many years ago. This is something that has helped us right through a difficult banking environment, whenever there is credit tightening."